No.________
NEWGEN RESULTS CORPORATION
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of
the date of grant set forth below (the "DATE OF GRANT") by and between Newgen
Results Corporation, a California corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT"). Capitalized terms not defined herein
shall have the meaning ascribed to them in the Company's 1996 Equity
Incentive Plan (the "PLAN").
PARTICIPANT: _____________________________
SOCIAL SECURITY NUMBER: _____________________________
ADDRESS: _____________________________
_____________________________
TOTAL OPTION SHARES: _____________________________
EXERCISE PRICE PER SHARE: _____________________________
DATE OF GRANT: _____________________________
FIRST VESTING DATE: _____________________________
EXPIRATION DATE: _____________________________
TYPE OF STOCK OPTION
(CHECK ONE): [ ] INCENTIVE STOCK OPTION
[ ] NONQUALIFIED STOCK OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an option
(the "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above (the "SHARES") at the Exercise Price Per Share set
forth above (the "EXERCISE PRICE"), subject to all of the terms and
conditions of this Agreement and the Plan. If designated as an Incentive
Stock Option above, the Option is intended to qualify as an "incentive stock
option" ("ISO") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "CODE").
2. EXERCISE PERIOD.
2.1 EXERCISE PERIOD OF OPTION. Provided Participant continues to
provide services to the Company or any Subsidiary or Parent of the Company,
the Option will become vested and exercisable as to portions of the Shares as
follows: (a) This Option shall not vest nor be exercisable with respect to
any of the Shares until _________, 199_ (the "FIRST VESTING DATE")
[NOTE: NO LATER THAN THE LAST DAY OF THE 12TH MONTH AFTER THE DATE OF GRANT];
(b) on the First Vesting Date the Option will become vested and exercisable
as to twenty percent (20%) of the Shares and (c) thereafter each year on the
anniversary of the First Vesting Date the Option shall vest as to an
additional twenty percent (20%) of the Shares until this Option is vest with
respect to 100% of the Shares. If application of the vesting percentage
causes a fractional share, such share shall be rounded up to the nearest
whole share.
2.2 VESTING OF OPTIONS. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED
SHARES." Unvested Shares may not be sold or otherwise transferred by
Participant without the Company's prior written consent.
2.3 EXPIRATION. The Option shall expire on the Expiration Date set
forth above and must be exercised, if at all, on or before the Expiration
Date;
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH OR DISABILITY. If
Participant is Terminated for any reason, except death or Disability, the
Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the Termination Date, may be exercised by
Participant no later than three (3) months after the Termination Date, but in
any event no later than the Expiration Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant is
Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the Termination Date, may be
exercised by Participant (or Participant's legal representative) no later
than twelve (12) months after the Termination Date, but in any event no later
than the Expiration Date. Any exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other than the
Participant's death or disability, within the meaning of Section 22(e)(3) of
the Code; or (b) twelve (12) months after the Termination Date when the
termination is for Participant's death or disability, within the meaning of
Section 22(e)(3) of the Code, is deemed to be an NQSO.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this Agreement
shall confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any
time, with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death or
incapacity, Participant's executor, administrator, heir or legatee, as the
case may be) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as EXHIBIT A, or in such other form as
may be approved by the Company from time to time (the "EXERCISE AGREEMENT"),
which shall set forth, INTER ALIA, Participant's election to exercise the
Option, the number of Shares being purchased, any restrictions imposed on the
Shares and any representations, warranties and agreements regarding
Participant's investment intent and access to information as may be required
by the Company to comply with applicable securities laws. If someone other
than Participant exercises the Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option
may not be exercised as to fewer than one hundred (100) Shares unless it is
exercised as to all Shares as to which the Option is then exercisable.
4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the shares being purchased in cash (by
check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the participant;
(b) by surrender of shares of the Company's Common Stock that either:
(1) have been owned by Participant for more than six (6) months and
have been paid for within the meaning of SEC Rule 144 (and, if such
shares were purchased from the Company by use of a
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promissory note, such note has been fully paid with respect to such
shares); or (2) were obtained by Participant in the open public
market; and (3) are clear of all liens, claims, encumbrances or
security interests;
(c) by tender of a full recourse promissory note having such terms as
may be approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code; provided, however, that Participants who are not
employees or directors of the Company shall not be entitled to
purchase Shares with a promissory note unless the note is
adequately secured by collateral other than the Shares;
(d) by waiver of compensation due or accrued to Participant for
services rendered;
(e) provided that a public market for the Company's stock exists, (1)
through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant
irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the Exercise Price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Exercise Price directly to the Company, OR (2) through
a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to pledge
the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly
to the Company; or
(f) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Committee permits, Participant may provide for payment of withholding taxes
upon exercise of the Option by requesting that the Company retain Shares with
a Fair Market Value equal to the minimum amount of taxes required to be
withheld. In such case, the Company shall issue the net number of Shares to
the Participant by deducting the Shares retained from the Shares issuable
upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise agreement and
payment are in form and substance satisfactory to counsel for the Company,
the Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate
legends affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is
an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer
of such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the
Company on the compensation income recognized by Participant from the early
disposition by payment in cash or out of the current wages or other
compensation payable to Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The Plan and this Agreement are
intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of this Agreement which is inconsistent with Section 25102(o)
shall, without further act or amendment by the Company or the Board, be reformed
to comply with the requirements of Section 25102(o). The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is
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under no obligation to register or qualify the Shares with the Securities and
Exchange Commission, any state securities commission or any stock exchange to
effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only by Participant. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.
8. COMPANY'S REPURCHASE OPTION FOR VESTED SHARES. The Company, or its
assignee, shall have the option to repurchase Participant's Vested Shares (as
defined in Section 2.2 of this Agreement) on the terms and conditions set forth
in this Section (the "REPURCHASE OPTION") if Participant is Terminated (as
defined in the Plan) for any reason, or no reason, including without limitation
Participant's death, Disability (as defined in the Plan), voluntary resignation
or termination by the Company with or without cause.
8.1 TERMINATION AND TERMINATION DATE. In case of any dispute as to
whether Participant is Terminated, the Committee shall have discretion to
determine whether Participant has been Terminated and the effective date of
such Termination (the "TERMINATION DATE").
8.2 EXERCISE OF REPURCHASE OPTION. At any time within ninety (90)
days after the Termination Date, the Company, or its assignee, may elect to
repurchase the Participant's Vested Shares by giving Participant written
notice of exercise of the Repurchase Option.
8.3 CALCULATION OF REPURCHASE PRICE FOR VESTED SHARES. The Company
or its assignee shall have the option to repurchase from Participant (or from
Participant's personal representative as the case may be) the Vested Shares
at the higher of the Participant's Exercise Price, proportionately adjusted
for any stock split or similar change in the capital structure of the Company
as set forth in Section 2.2 of the Plan, or the Fair Market Value of such
shares on the Participant's Termination Date.
8.4 PAYMENT OF REPURCHASE PRICE. The repurchase price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness of
Participant to the Company or such assignee, or by any combination thereof.
The repurchase price shall be paid without interest within sixty (60) days
after exercise of the Repurchase Option.
8.5 RIGHT OF TERMINATION UNAFFECTED. Nothing in this Exercise
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent or Subsidiary of
the Company) to terminate Participant's employment or other relationship with
Company (or the Parent or Subsidiary of the Company) at any time, for any
reason or no reason, with or without cause.
8.6 TERMINATION OF REPURCHASE OPTION. The Company's Repurchase
Option for Vested Shares will terminate when the Company's securities become
publicly traded.
9. COMPANY'S RIGHT OF FIRST REFUSAL. Unvested Shares may not be sold
or otherwise transferred by Participant without the Company's prior written
consent. Before any Vested Shares held by Participant or any transferee of
such Vested Shares (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including without limitation
a transfer by gift or operation of law), the Company and/or its assignee(s)
shall have an assignable right of first refusal to purchase the Vested Shares
to be sold or transferred (the "OFFERED SHARES") on the terms and conditions
set forth in this Section (the "RIGHT OF FIRST REFUSAL").
9.1 NOTICE OF PROPOSED TRANSFER. The Holder of the Offered Shares
shall deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer the Offered
Shares; (ii) the name of each proposed bona fide purchaser or other
transferee ("PROPOSED TRANSFEREE"); (iii) the number of Offered Shares to be
transferred to each Proposed Transferee; (iv) the bona fide cash price or
other consideration for which the Holder proposes to transfer the Offered
Shares (the "OFFERED PRICE"); and (v) that
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the Holder will offer to sell the Offered Shares to the Company and/or its
assignee(s) at the Offered Price as provided in this Section.
9.2 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within thirty
(30) days after the date of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase the Offered
Shares proposed to be transferred to any one or more of the Proposed
Transferees named in the Notice, at the purchase price determined as
specified below.
9.3 PURCHASE PRICE. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price. If the Offered Price
includes consideration other than cash, then the cash equivalent value of the
non-cash consideration shall conclusively be deemed to be the value of such
non-cash consideration as determined in good faith by the Company's Board of
Directors.
9.4 PAYMENT. Payment of the purchase price for Offered Shares will
be payable, at the option of the Company and/or its assignee(s) (as
applicable), by check or by cancellation of all or a portion of any
outstanding indebtedness of the Holder to the Company (or to such assignee,
in the case of a purchase of Offered Shares by such assignee) or by any
combination thereof. The purchase price will be paid without interest within
sixty (60) days after the Company's receipt of the Notice, or, at the option
of the Company and/or its assignee(s), in the manner and at the time(s) set
forth in the Notice.
9.5 HOLDER'S RIGHT TO TRANSFER. If all of the Offered Shares
proposed in the Notice to be transferred to a given Proposed Transferee are
not purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Offered Shares
to that Proposed Transferee at the Offered Price or at a higher price,
PROVIDED that such sale or other transfer is consummated within 120 days
after the date of the Notice, and PROVIDED FURTHER, that (i) any such sale or
other transfer is effected in compliance with all applicable securities laws
and (ii) the Proposed Transferee agrees in writing that the provisions of
this Section will continue to apply to the Offered Shares in the hands of
such Proposed Transferee. If the Offered Shares described in the Notice are
not transferred to the Proposed Transferee within such 120 day period, then a
new Notice must be given to the Company, and the Company will again be
offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.
9.6 EXEMPT TRANSFERS. Notwithstanding anything to the contrary in
this Section, the following transfers of Vested Shares will be exempt from
the Right of First Refusal: (i) the transfer of any or all of the Vested
Shares during Participant's lifetime by gift or on Participant's death by
will or intestacy to Participant's "immediate family" (as defined below) or
to a trust for the benefit of Participant or Participant's immediate family,
provided that each transferee or other recipient agrees in a writing
satisfactory to the Company that the provisions of this Section will continue
to apply to the transferred Vested Shares in the hands of such transferee or
other recipient; (ii) any transfer of Vested Shares made pursuant to a
statutory merger or statutory consolidation of the Company with or into
another corporation or corporations (except that the Right of First Refusal
and Repurchase Option will continue to apply thereafter to such Vested
Shares, in which case the surviving corporation of such merger or
consolidation shall succeed to the rights of the Company under this Section
unless the agreement of merger or consolidation expressly otherwise
provides); or (iii) any transfer of Vested Shares pursuant to the winding up
and dissolution of the Company. As used herein, the term "IMMEDIATE FAMILY"
will mean Participant's spouse, the lineal descendant or antecedent, father,
mother, brother or sister, adopted child or grandchild of the Participant or
the Participant's spouse, or the spouse of any child, adopted child,
grandchild or adopted grandchild of Participant or the Participant's spouse.
10. TAX CONSEQUENCES. Set forth below is a brief summary as of the
Date of Grant of some of the federal and California tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION
OR DISPOSING OF THE SHARES.
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10.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there will
be no regular federal or California income tax liability upon the exercise of
the Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be treated as a
tax preference item for federal income tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
10.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Shares on the
date of exercise over the Exercise Price. The Company will be required to
withhold from Participant's compensation or collect from Participant and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
10.3 DISPOSITION OF SHARES. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of the Option for Vested Shares and, in the case of an ISO, are
disposed of more than two years after the Date of Grant, any gain realized on
disposition of the Shares will be treated as long term capital gain for
federal and California income tax purposes. If Shares purchased under an ISO
are disposed of within the applicable one year or two year period, any gain
realized on such disposition will be treated as compensation income (taxable
at ordinary income rates) to the extent of the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise Price.
The Company may be required to withhold from Participant's compensation or
collect from Participant and pay to the applicable taxing authorities an
amount equal to a percentage of this compensation income at the time of
exercise.
11. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a shareholder with respect to any Shares until Participant
exercises the Option and pays the Exercise Price.
12. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final
and binding on the Company and Participant.
13. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties
and supersede all prior undertakings and agreements with respect to the
subject matter hereof.
14. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed
to the Corporate Secretary of the Company at its principal corporate offices.
Any notice required to be given or delivered to Participant shall be in
writing and addressed to Participant at the address indicated above or to
such other address as such party may designate in writing from time to time
to the Company. All notices shall be deemed to have been given or delivered
upon: personal delivery; three (3) days after deposit in the United States
mail by certified or registered mail (return receipt requested); one (1)
business day after deposit with any return receipt express courier (prepaid);
or one (1) business day after transmission by facsimile, rapifax or
telecopier.
15. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement including its rights to repurchase Shares under the
Right of First Refusal. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied
to agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined
by a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
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17. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of
the Plan and this Agreement. Participant has read and understands the terms
and provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that
there may be adverse tax consequences upon exercise of the Option or
disposition of the Shares and that Participant should consult a tax adviser
prior to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
in duplicate by its duly authorized representative and Participant has
executed this Agreement in duplicate as of the date set forth below.
NEWGEN RESULTS CORPORATION PARTICIPANT
By:
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(Signature) (Signature)
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(Please print name) (Please print name)
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(Please print title)
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(Date)
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